Government

New Mortgage Down Payment Rule

On December 11, 2015 the Finance Minister Bill Morneau announced changes to the rules related on how much mortgage down payment for government-backed mortgage insurance the consumer must provide. As stated in the Department of Finance Canada’s press release, the purpose of new mortgage down payment rule changes are “to contain risks in the housing market, reduce taxpayer exposure, and support long-term stability.”

image courtesy of Macleans.ca

The new mortgage down payment rule comes into effect on February 15, 2016 for home purchase prices above $500,000 with changes to the minimum down payment amount a home buyer can provide. Up to a home purchase price of $500,000 the 5% mortgage down payment rule is unchanged. Any amount above and beyond $500,000 the borrower must now provide 10% of the above and beyond amount.

Here’s how to calculate how much mortgage down payment you will need if the purchase price is more than $500,000.

Example

Before the mortgage down payment rule becomes effective

Purchase price: $750,000 x 5% = $37,500

Mortgage amount: $750,000 – $37,500 = $712,500

After the mortgage down payment rule becomes effective

Purchase price: $750,000

$500,000 x 5% = $25,000

$250,000 x 10% = $25,000

Total down payment you will need is $25,000 + $25,000 = $50,000

Mortgage amount: $750,000 – $50,000 = $700,000

For the above example and comparable, after February 15, 2016 when the new mortgage down payment rules come into effect the borrower will need to have an additional $12,500 to pay towards the down payment.

Curious to know how much the mortgage payment’s will be? Head over to our mortgage calculator page. You can select a mortgage rate from any of our mortgage terms on our mortgage rates page to use in the mortgage calculator.

Contact us for more complex calculations and for any questions you may have regarding the new mortgage down payment rule or any other mortgage related questions. We’re here to help!

Did you know that you can check your credit report for free?

That’s right, once a year you can ask the credit reporting agencies Equifax and Transunion for free to mail you, or you can pick it up in person, your personal credit report. If you need it faster, you can always create an account online with them and quickly pull your credit report and save it electronically for future reference. Otherwise, if you have the time, you can wait for your personal credit report to arrive in the mail.

Check your credit report once a year

It is recommended to check your credit report once a year. This regular interval is helpful to prevent fraud, because when you check your credit report you can see exactly all your credit activities and if someone fraudulently uses your credit information it will be noticed and can be rectified immediately. Alternatively, if left unchecked and only noticed some time later when you apply for a credit card, or a car loan, or for a mortgage, and then at that point it is noticed, the problem can set you back with your applications as you first will need to resolve the issue(s).

It is educational and informative to check your credit report

When you check your credit report not only do you see a credit score, but you see everything about your credit activity and history in the last seven years. You learn what is being reported to the credit bureaus, what your balances, are and also you might see credit items that you thought were closed or canceled or paid off still no closed or not canceled or not paid off. This gives you time to go after the discrepancies and rectify the problem, because it could be negatively affecting your credit strength and score.

Government of Canada has information on how to check your credit score

We are thankful to the Government in being proactive in providing helpful information and tools that assist the consumer in learning about how to manage their debts and improving their credit strengths.

To learn more about how to check your credit score or find out about the different tools on their web site, check out the following links:

Financial Consumer Agency of Canada

Trusterra Mortgage is also hear to help. Should you have any questions about credit score and how it affects your mortgage approval rating do not hesitate to Contact Us. We would be happy to assist you.

Harper Government Teams up With the Canadian Home Builders’ Association

Here is the press release from the Government of Canada dated 5 March 2015 about the Harper Government Teams up With Canadian Home Builders Association to ensure Canadians Get it in Writing!

Harper Government teams up with the Canadian Home Builders’ Association to ensure Canadians Get it in Writing!

The Honourable Kerry-Lynne D. Findlay, P.C., Q.P., M.P., Minister of National Revenue, announced today that the Government of Canada is providing approximately $745,000 over the next three years to support the Canadian Home Builders’ Association’s (CHBA) Get it in Writing! campaign. The campaign helps Canadians and legitimate businesses protect themselves from unscrupulous contractors in the construction industry who are operating through the underground economy. Minister Findlay made the announcement at the CHBA’s National Conference in Halifax, Nova Scotia.

The Get it in Writing! campaign raises awareness about the safety and financial risks the public face if they participate in the underground economy by purchasing construction or home renovation services “under the table.” It provides consumers and home renovation contractors with tools and information to discourage and reduce participation in the underground economy.

The Government of Canada works closely with industry and other levels of government to combat the underground economy in Canada. Minister Findlay launched a three-year Underground Economy Strategy, Reducing Participation in the Underground Economylast fall, and formed an Advisory Committee of industry representatives.

promote better understanding of Canada’s underground economy – where, when and how it occurs;

reduce the social acceptability of participation in the underground economy; and

reduce participation in the underground economy through a range of initiatives over the next three years.

On November 17, 2014, the Minister of National Revenue’s Underground Economy Advisory Committee held its first meeting in Toronto, Ontario. The Committee has representatives from academia and key industry associations representing the financial, restaurant, retail, home building, and construction industries, as well as small businesses and chambers of commerce.

Quotes

“The Canadian Home Builders’ Association is a valuable partner, and a leader among peers in raising awareness about the pitfalls of participating in the underground economy in the construction industry. We are proud to support the Get it in Writing! campaign. It is a clear example of how government and industry can work together to make a genuine difference in the safety and economic health of our communities.”

“Participating in the underground economy provides an unfair advantage to unscrupulous businesses, and undermines the competitiveness of the millions of legitimate Canadian entrepreneurs. By simple actions like always getting a receipt, Canadians can do their part and join our Government and industry partners in tackling this pervasive and costly problem.””

“Contractors who cut corners when it comes to their taxes are also likely to cut corners in their work. That’s bad news for Canadian consumers. The Canadian Home Builders’ Association urges Canadians to not expose themselves to undue risk, both physical and financial. The Government of Canada’s underground economy strategy is a significant step in fighting the underground economy. We thank the Government of Canada for its renewed support for the Get it in Writing! campaign.””

Low Interest Rates Good Reason to Lower Debt

In a press release on February 6, 2015 Lucie Tedesco Commissioner Financial Consumer Agency of Canada stated that just because interest rates have gone down, referring to the recent Bank of Canada decision to lower the overnight rate, does not mean that Canadians “should take on more debt.” In fact the low interest rates good reason to lower debt.

picture courtesy of the Financial Post

To many mortgagers (owing money borrowed on real estate) or those with loans whose payments are calculated based on the Prime rate, which in turn is calculated on the Bank of Canada’s overnight rate, low interest rates can be a double edged sword. Especially if you can’t control your spending; however if you are able to curve your appetite for borrowing, then for you low interest rates good reason to lower debt as you can pay more towards your principal and less towards interest payments.

Commissioner Tedesco went on to say that “Canadians should look at this low interest-rate environment as an opportunity to pay debt down, rather than to accumulate more, even for a larger house, a newer car or a winter vacation.” We should be realistic and be ready for when interest rates will increase.

For its part the Financial Consumer Agency of Canada has developed tools and resources to assist the consumer with managing their debt obligations and can be found at “How to Beat that Debt.”

Trusterra Mortgage is here to help. If you currently have a mortgage and are considering to consolidate your debt, or want to get the lower interest rates that are available currently, contact us to see what options are available for you and we’ll assess your current financial situation to see whether it is worth it for you to break your mortgage to refinance it or not.

Bank of Canada Rate Cut

The Bank of Canada rate cut could be just around the corner. Analysts are predicting that due to the not-so good Canadian economy outlook, there is the possibility the Bank of Canada rate cut could be more real than fiction at its next interest rate announcement on March 4, 2015.

It was the surprise of the year, and we’ve barely started the new year, when the Governor of the Bank of Canada Stephen Poloz announced last week on Wednesday January 21 that they were lowering the key lending interest rate. Not to our surprise, this week Chartered Banks and other institutional lenders begin dropping their prime lending rate in response to the Bank of Canada’s rate cut. The Prime Rate is now at 2.85%.

picture courtesy of CBC

There are several indicators confirming the poor performance of the Canadian economy, such as the Statistics Canada labor market revisions, big 6 banks not lowering their prime rate equal to the Bank of Canada’s rate cut by 25 basis points and only lowering theirs by 15 basis points and another worry is the drop in oil prices which the Bank of Canada suggests is their main concern that could potentially get worse and impact not only the Alberta economy which is largely based on the oil sand productions, but also to resonate nation wide.

It’s a wait and see game at this point. After all, in the past 5 years there were many naysayers and predictions with what will happen with the prime lending rate, but at the end it never changed until 5 years later, and to our surprise, it went down instead of up.

What are your thoughts about the recent Bank of Canada rate cut, and future ones? How do you feel the Canadian economy is doing right now and where will we be next year this time?

Account Selector Tool

The Bank Account Selector Tool is really cool and a helpful tool on the Financial Consumer Agency of Canada’s web site. It has been created to help you the consumer to compare features and find the chequing or savings account that best suits your needs.

The account selector tool has many options to select from making your search refined and accurate to find the right bank account for you.

On the left hand side of the site you can narrow your search by telling the tool what type of account you are considering; either a ‘chequing’ or ‘savings’ account. Then you tell it whether you want the service to be in CAD Canadian Dollar, or USD United States Dollar. Further refinements are also available, such as selecting type of service features you would like to have and the technology to use to access the account.

Save Money for your Children

November is Financial Literacy Month #FLM2014. In this post we wanted to raise awareness on the importance of parents setting aside money on a systematic and regular basis for their children’s future. To save money for your children is a noble thing to do. It show’s your detachment from money and your keen interest for the financial future wellbeing of your children. Naturally to save money for your children does not mean that you are supposed to pay their way for the rest of their lives. No. It means to save money for their future post-secondary educational plans. After all, it is still true that with education you empower people to do good things, to earn a livelihood and support oneself and loved ones.

There are certainly diverse set of ways to save money for your children. Perhaps the simplest way would be to just open a savings bank account and every month deposit predetermined amounts into the account and let compound interest work its magic.

The Government of Canada has created special plans just for children and their future.

Registered Education Savings Plan (RESPs).

Here is Canada Revenue Agency’s explanation.

A registered education savings plan (RESP) is a contract between an individual (the subscriber) and a person or organization (the promoter).

Canada Learning Bond

CRA explains “the Canada Learning Bond offered by the Government of Canada helps parents get a head start in saving for their child’s education after high school.” Find out if your children are ‘ELIGIBLE.’

Canada Education Savings Grant (CESG),

Many Canadian banking institutions also support and work with the Government of Canada in providing bank accounts and services towards its programs to help you the parent save money for your children. Visit their web sites to learn more about their services.

How to protect yourself from financial fraud

You can easily learn how to protect yourself from financial fraud. The first thing to remember and accept is financial fraud can happen to anyone and you need to take the necessary steps and measures to protect yourself from financial fraud.

In learning how to protect yourself from financial fraud you need to first recognize in what forms fraudulent activities come in; such as emails, phone messages, web sites, SMS, from a stranger, lottery, survey call, or even from a friend.

In this video prepared by the Financial Consumer Agency of Canada, whose mission is to empower Canadian financial consumers and promoting responsible financial market conduct, we learn the types of fraud, tips to avoid scams and what fraud victims should do.

If you feel that you have been a victim of fraud contact your local law enforcement agency immediately. You can also visit the Financial Consumer Agency of Canada’s web site for more tools and resources to help you.

A Home Buying Tip that can help you buy the right home

Here is a home buying tip for those of you looking to buy your next home. When doing a home inspection make sure to be there during the actual inspection of the house by the home inspector.

In a future article and in follow up with our home buying tip we will share more information about the importance of hiring a home inspector.

Another home buying tip is don’t hire the first home inspector you see in the news paper advertisement, but rather, call around and ask friends and family whether they know of any trusted and experienced home inspectors they can refer you to.

In this post we are also highlighting the Government of Ontario’s agency responsible for the protection of the consumer when it comes to these types of matters, the Consumer Protection Ontario. On their web site you will find helpful information and home buying tips.

Walking through the home inspection with the Home Inspector can also be a learning experience for you as the inspection is a thorough one where all sections and technical operations of the home are looked at to make sure there are no dangerous or critical problems with the home.

You can visit the web site of The International Association of Certified Home Inspectors where you can find helpful information about home inspectors, including home buying tips.

Will Bank of Canada Lower Interest Rates

On Wednesday, 16 July 2014, the Bank of Canada will announce its decision on the target for the overnight rate. What do you think will happen tomorrow, will Bank of Canada Lower Interest Rates, or will they stay the same, or even go up?

Since September 2010 the Bank of Canada has not changed it’s overnight lending rate, and we must wonder if the rate will be moving up at some point, if not now, when? As the Bank of Canada’s overnight lending rate remains untouched, the Canadian Chartered Banks and other lending institutions maintain their Prime lending rate at 3.00%.

The Governor of the Bank of Canada Mr. Stephen Poloz and his team of advisers working at the Bank of Canada must look at many variables and factors affecting the Canadian economy and based on that decide if it is timely to raise or lower the interest rate.

If we were to make any predictions, it would be towards the decision being one of maintaining the overnight rate the same and not touching it. However, in his previous interest rate announcement Mr. Poloz did give hints that they are not ruling out a rate decrease either.

It will be interesting to see what happens tomorrow. What do you think will happen, will Bank of Canada lower interest rates?